The U.S.-China Economic and Security Review Commission issued a clarion call to Congress in a bipartisan consensus report released yesterday, outlining critical bipartisan recommendations intended to reform decades-old U.S. trade policies that China has been exploiting.

Among the Top 10 key recommendations, the bipartisan commission called on Congress to eliminate de minimis duty-free exemptions for all global e-commerce shipments in the wake of rampant abuse of the loophole by e-commerce platforms and other importers that are facilitating a tsunami of shipments from China directly to our doorsteps.

The adverse implications of this trade policy have expanded beyond creating a manufacturing crisis to spawning a consumer safety crisis—leading to economic, safety, and national security concerns.

NCTO President and CEO Kim Glas serves as a congressionally appointed commissioner on the commission and highlighted several key recommendations during the public release event.

The De Minimis Loophole: Not Just a Trade Issue, A Consumer Safety Crisis

One of the commission’s top recommendations to Congress is the elimination of de minimis duty-free exemptions for global e-commerce shipments.

The de minimis exemption under U.S. trade law allows goods valued under $800 to enter the U.S. duty-free daily with limited inspection. Originally intended for small souvenirs decades ago, this provision has become a gateway for unchecked imports.

Today, e-commerce platforms like Shein and Temu—and scores of other importers and countries—are taking advantage of this trade rule to boost sales and exports for a competitive advantage over domestic manufacturers. This loophole is flooding the U.S. market with cheap imports, often toxic and dangerous and produced under unethical conditions like forced labor.

This year alone, more than 4 million shipments a day (1.4 billion de minimis shipments a year) are estimated to have entered the U.S., often bypassing safety and regulatory scrutiny.

But the impact on manufacturing is only one area of destruction de minimis has wrought.

Commissioner Kim Glas emphasized the stakes at the commission’s public rollout of the report on Tuesday.

Glas said the commission’s recommendation centered around the “alarming nature” of de minimis and how much these shipments have grown.

“In the e-commerce environment today, de minimis has become a funnel for Chinese products to receive duty-free, [unscrutinized] treatment as well as other products from around the world,” Glas said. That is why the commission looked at this very closely this year from a consumer product safety perspective—everything from children’s toys to makeup to pool filters that ended up killing people.

“There are some very serious consumer product safety regulations and [serious concerns about] the inability to police these kinds of products coming into the United States,” she said.

See her full remarks here:

In a separate but related recommendation, the commission called on Congress to amend an existing consumer product safety statute to grant the U.S. Consumer Product Safety Commission (CPSC) “unilateral mandatory recall authority over products where the Chinese seller is unresponsive to requests from the CPSC for further information or to initiate a voluntary recall and the CPSC has evidence of a substantial product hazard, posing a substantial risk of injury to the public.” The commission also recommended classifying Chinese e-commerce platforms as distributors to allow for enforcement of recalls and other safety standards for products sold on these platforms.

 E-Commerce Platforms Exploiting the System

Platforms like Shein and Temu have built their business models around aggressive use of de minimis in large part to avoid paying tariffs, utilizing the loophole as a competitive advantage over domestic manufacturers.

 Commissioner Jacob Helberg explained the threat to Western industries in stark terms:

“We’re not going to have a fashion industry across the West if we keep these types of loopholes. It’s very clear that platforms like Shein and Temu shop around the world to different fashion brands, steal all designs and then ship copycats of these products in 3 days tax-free to customers around the West. This is true in the United States. This is true in many parts of Europe. We can either have a fashion industry or we can have de minimis, but we probably can’t have both.” See his full remarks here:

To that end the report recommended amending applicable laws to mandate that online marketplaces clearly disclose on product listings for Chinese-made goods the name, physical address, and contact information for the manufacturer. “The online marketplaces should also be required to clearly display a warning label that the item is manufactured in a country that does not comply with U.S. consumer safety standards,” the report stated.

Commissioner Michael Kuiken stressed the need for robust implementation and coordination with the Department of Homeland Security (DHS) and U.S. Customs and Border Protection (CBP).

“The focus of the recommendation is obviously on repeal of de minimis. The other critical part of the recommendation is resourcing and personnel,” he said.

“If we’re going to now repeal de minimis, there needs to be a dramatic increase in the number of personnel and resources and analytical tools we give CBP. Because undoubtedly there will be some modification of shipping behaviors to make sure there are workarounds [by] these firms. That’s going to require a lot of work on CBP’s part and so we have to think about that problem as well.”

He stressed, “If we repeal de minimis, CBP must be ready to counter inevitable workaround strategies. That requires resources, personnel, and advanced tools.”

The U.S. isn’t alone in addressing de minimis, Glas said. The European Union, South Africa, and Brazil are tightening their policies to close similar loopholes.

Commissioner Aaron Friedberg underscored the need for allied collaboration.

“Restricting inflows of unsafe products and ensuring fair trade requires cooperation with friends and allies,” is critical he said.

Commissioner Mike Wessel said, “We are still in the learning phases of how to track products and how to enforce the law, but we also need to expand dramatically not only with Mexico and Canada but also other trading partners, their recognition of human rights violations that are occurring and how best to get our allies and partners acting in tandem.”

Beyond De Minimis: Tackling Rampant Transshipments & Fraud

Another critical recommendation made by the commission is a directive to DHS and CBP, in conjunction with the Commerce Department, to “develop assessment tools capable of identifying the true origins of parts, components, and materials contained in products entering the United States to prevent tariff evasion and limit safety and security risks in light of the increasing complexity of global supply chains.”

Commissioner Glas highlighted this recommendation noting it is aimed at giving agencies better access to tools that “can be used for origin verifications.”

She said she co-chaired a prior commission hearing looking at unsafe products coming into the United States and illegal transshipments and origin claims that allow Chinese products to “wash onto the world stage” unchecked.

“They are trying to export their way out of the economic crisis they are facing internally,” Glas said of China.

See her remarks here:

With this recommendation to Congress, “we need agencies to coordinate to ensure there is no misclassification of goods, duty evasion, or illegal transshipments to ensure component parts are in fact meeting rules of origin or requirements when a product says ‘Made in Vietnam’ or made in some other country.”

Among other recommendations, the commission called for the U.S. Trade Representative’s office, in conjunction with Commerce and the U.S. International Trade Commission, to investigate Chinese trade practices, production, prices and trade flows in Mexico and Canada—key U.S. trading partners under the U.S.-Mexico-Canada Agreement.

Repealing Permanent Normal Trade Relations (PNTR) Status for China

The report also recommends repealing China’s Permanent Normal Trade Relations (PNTR) status, which has allowed Beijing to exploit U.S. markets while ignoring its World Trade Organization (WTO) commitments.

Commissioner Helberg noted, “For over two decades, China has failed to abide by its trade commitments. Repealing PNTR gives the president the flexibility to recalibrate trade policies annually.”

“Repealing PNTR would basically provide the president with the authority to revisit China’s MFN status under U.S. law. It would not automatically trigger on its own an increase in tariffs. It would give the president the authority to adjust tariffs.

“The president deserves the flexibility of recalibrating America’s trading relationship with China. Every year, since the founding of this commission, the conclusion has been that China has failed to live up to its WTO commitments. It hasn’t done so in all 23 years of being part of the WTO. It is fair to assume it’s not going to start suddenly abiding by its commitments.

See his remarks here:

The “China shock” has been devasting economically to a substantial number of communities in this country,” Helberg added. “Since COVID, we have also seen the national security implications of being industrially over-reliant on China. The goal of this recommendations is to give the U.S. president the authority to readjust that moving forward on an annual basis. “

A Bipartisan Call for Urgency

The commission’s report is an urgent and clear-eyed call to Congtress to rethink trade policies that have long benefited China at the expense of American industries and consumers.

The bipartisan consensus signals a pivotal moment for trade reform, with implications spanning from consumer safety to domestic and global economic fairness. Congress now faces the challenge of translating these recommendations into actionable policy.

The commission’s report also contained other types of recommendations, including artificial intelligence, national strategic stockpile preparedness, financial disclosure and export controls, among many others.

View the full report and public commission hearing here.

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